A Thought Experiment

“Imagination is more important than knowledge”.

– Albert Einstein

Let’s imagine that you take a staff climate survey of your organization, and discover that 80 percent of your people are unhappy. Unless you work in an industry where it literally makes no difference how unhappy or disconnected your staff is, you’d more than likely assume that an 80 percent dissatisfaction rate means trouble. Absenteeism, inefficiency, staff turnover and even low-level crimes like stealing are all quite likely in such an obviously unhappy workplace.

Now let’s, in our imagination, dial that staff dissatisfaction figure down to 50 percent. Still a problem? How about 20 percent? Or five percent?

For decades, leaders and managers have been taught that the magic number is around 20 percent. That figure is loosely based on the work of the 19th century Italian economist Vilfredo Pareto. In the leadership world of our parents, grandparents and anyone over 30, we were taught to assume that any staff problems under 20 percent are more or less okay, and any staff problems over 20 percent are more or less not. That’s based on Pareto’s view that around 80 percent of your leadership problems will come from the unhappy 20 percent – something you can more or less live with.

Pareto lived at the height of the industrial age. In that time, it was natural to think of people and organizations as machines, governed by much the same general principles. If 20 percent of the weaving machines in your factory were out of action, you could probably still (barely) operate. Therefore, the figures and considerations would be much the same for your workforce.

In the post-industrial age, we’ve rediscovered complexity, nonlinearity and chaos. In the process, we’ve also rediscovered that organizations, teams, groups, economies and nations function much more like living things than they do like machines. They grow and die; they rely on feedback to survive and adapt; both large and small things can make them sick; and their driving imperative is always survival.

Enron, the giant energy and commodities company, was brought down in 2001 by a handful of employees. The Tiananmen Square (1989) and Arab Spring (2010) democracy movements both began with a few hundred protesters. Barings Bank, the Queen of England’s bank founded in 1762, was brought down over a 24-hour period in 1995 by one employee. None of these events was foreseen. After all, a manager using the Pareto rule would be compelled to dismiss the signs in every case.

It’s important to note that this has always been true. Aside from the accelerating social effects of technology, human beings have not changed at all. All that’s really changed are our models and understandings of how we work in groups. Many great changes in human and business history have had tiny beginnings, just as they do in living things. All life begins with a single cell, as do all cancers. World War One began with a single assassination.

The implications for modern business and government can seem a little bit frightening. At first blush, it now looks as though you have to panic if even ten people in your 2,000-person organization – less than half a percent – are dissatisfied. How on earth do you manage that?

Let’s return to the thought experiment, plugging in a five percent dissatisfaction rate. And now let’s add something Pareto didn’t really address – a feedback loop. That’s the secret of all living things. Cut the feedback loop and living things die very quickly. In this new experiment, we don’t know if a five percent dissatisfaction rate is a problem or not; but we monitor it with constant feedback. That way, if the problem grows, we’ll experience early warning signs and can take fast action. Living things don’t seek feedback every twelve months and then dismiss it in the way that most organizations do. Rather, feedback is a 24-hour, seven-day thing and is built into their physiology and design.

That’s where the modern, globalized world of leadership is going. The good news for traditionalists is that an understanding of this is not compulsory.

But then, as a former president of Harvard once said, neither is survival.

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